Tax Tomfoolery

Tax Tomfoolery
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<p>House Speaker Paul Ryan, surrounded by House and Senate Republican leaders, announcing the GOP tax bill.</p>

House Speaker Paul Ryan, surrounded by House and Senate Republican leaders, announcing the GOP tax bill.

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Republican lawmakers are playing a sinister and cruel game that could affect millions of Americans adversely. They have loaded up their tax proposal with so many corporate giveaways and tax cuts for the wealthiest Americans for two purposes: First, Republicans are never so delighted as when they are giving huge sums of money to people who do not need more; and, second, GOP legislators are happy to explode the deficit so they can then turn around and justify gutting social programs.

Some of the cuts to entitlements could be automatic. The Congressional Budget Office warns that the tax bill could trigger an arcane budget rule that requires slashing Medicare payments and other social spending if the deficit increases beyond agreed-upon numbers. Republicans claim the tax cuts will pay for themselves through increased economic growth, but they offer no evidence for that conclusion and recent history indicates that tax cuts almost always result in the government having less revenue. Independent and nonpartisan analysts estimate that the GOP tax proposal would result in zero growth over the next decade.

The Republican strategy is disingenuous. The party of deficit hawks is already complaining about the ballooning deficit — even before new tax cuts are enacted — and suggesting that spending cuts must follow to curtail the national debt. “You cannot get the national debt under control, you cannot get that deficit under control, if you don’t do both; grow the economy, cut spending,” says Paul Ryan, Speaker of the House. Ryan believes the GOP tax plan “grows the economy” (a dubious assertion), but, he adds, “We’ve got a lot of work to do cutting spending.”

Democrats already are pouncing, saying the tax bill is, among other things, a tool to achieve the kind of entitlement cuts dear to the hearts of Republicans. “This is a nasty, two-step strategy that has long been the holy grail for hard-right Republicans,” says Senator Chuck Schumer, Democrat of New York and the minority leader. “If this bill passes, you can bet the Republicans will immediately sharpen the knives for middle-class benefits.”

Since many middle class taxpayers will see their rates go up over time (tax cuts in the proposed legislation are permanent for corporations, temporary for most middle-income families), many Americans will discover that the GOP bill costs them more and gives them fewer services. Such a deal!

But, wait, it gets worse. Since Senate Republicans want to pass the tax bill under so-called reconciliation rules (to avoid a filibuster or bartering for Democratic votes), the bill must be crafted to keep the deficit within certain limits. Republicans need to offset the huge tax cut that President Donald Trump and other very rich people will get by finding additional revenue immediately. Where to look? Well, why not eliminate the individual mandate in the Affordable Care Act? Doing that not only raises billions of necessary dollars (because the federal government will subsidize fewer purchasers of health insurance), but it also removes a key element in the healthcare bill, likely dealing it a death blow. That’s a win-win for Republicans who hate the ACA but love enriching their donors.

Republican legislators claim their purpose is to reinstate choice for healthcare consumers by repealing the mandate requiring all Americans to purchase insurance or pay a penalty. Do not be fooled: The real purpose is to undermine Obamacare and enable tax cuts through the money saved. Remember, the reason Republicans tried to repeal and replace Obamacare before taking up their tax bill was because the GOP needed the additional revenue to finance tax cuts.

The Congressional Budget Office says scrapping the mandate would reduce the number of American with health insurance by 13 million over a decade while causing premiums to rise by 10 percent. The end result of the GOP tax bill: The wealthiest Americans get a bonanza of a tax cut, while everyone else sees no tax cut or pays higher taxes, gets fewer services, and loses health insurance.

Many Americans see through GOP chicanery. A Quinnipiac poll reveals many are convinced the House and Senate tax bills (there are differences between the two proposals) are designed to benefit the rich, not the middle class. Just 16 percent think the plan will reduce their taxes, while 61 percent believe the wealthy gain the most. Other polls yield similar findings.

Fortunately, some Republicans are listening to the polls and their constituents. While the House passed its version of the bill, the legislation may be in trouble in the Senate. Senator Ron Johnson, a Wisconsin Republican and a usually reliable conservative vote, has indicated opposition to both tax bills as currently written because they benefit, he thinks, large corporations at the expense of smaller companies. Johnson is no wild-eyed radical, as some of the smaller companies he wants to protect are hedge funds and law firms. But, he is a critical vote, as is Senator Susan Collins of Maine, who objects to repeal of the ACA’s individual mandate. Collins was one of three Republicans who joined with all Democrats to sink GOP efforts to repeal and replace Obamacare. Without Johnson and Collins, Republicans would need every other member of their caucuses to vote for the tax bill, a result far from guaranteed.

The Senate is not likely to complete work on its shell game, aka, a tax bill, until after Thanksgiving.

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